Deducting the VAT on a helicopter is five questions

A helicopter. A French company on the papers. One tenant, the owner himself. "Can we deduct the VAT on the purchase?" There is no single question here; there are at least five.

1. Can you deduct at all? The deduction lives or dies on the link to taxed output. In Voestalpine (C-475/23, October 2024) the Court allowed deduction even where an asset was handed over free of charge, because it served the company's taxable business. The flip side: no real business, no link, no deduction. The Enkler test of 1996 still draws the line, at income on a continuing basis and terms a stranger would get. One related tenant at a friendly rate is a toy with a VAT number.

2. Where do you deduct? Where the VAT arose. German VAT on the invoice does not go into a Baltic return. Registration or refund is decided before the purchase.

3. Does the lessee's residence matter? Directly. Short-term hire is taxed where the machine is handed over. Long-term hire to a private individual is taxed at his place of residence, under Article 56. The tenant's address can move the VAT to another country, or out of the European Union entirely.

4. Do the rental conditions matter? Högkullen (C-808/23, July 2025): Sweden tried to reprice a parent company's below-cost services to open market value. Market rent, paid invoices and a flight log that matches the story, or the authority writes the numbers instead.

5. And when you sell? The deduction is not final for five years (Articles 187 to 188). Sell with VAT and it survives. The Court does not forgive a sloppy exit: in Vittamed (C-293/21) the capital goods never reached taxable use and the company was wound up, and the deduction was repaid. Liquidation, private withdrawal, a gift to the owner — the refund flies home, with interest.

VAT on flying assets is won in the file: lease, pricing, logbook, exit plan. Built before the first flight rather than during the audit.

The instruments behind the five questions are Articles 167 to 168 of Directive 2006/112/EC for the right of deduction, Article 56 for the place of supply of hiring means of transport, and Articles 187 to 188 for the capital goods adjustment period. The judgments are Voestalpine Giesserei Linz C-475/23 (4 October 2024), Högkullen C-808/23 (3 July 2025), Vittamed technologijos C-293/21 (6 October 2022) and Enkler C-230/94 (26 September 1996).

Each turns on its own facts, and none of them decides a helicopter held by a company with a single related tenant. Nothing above addresses the customs side of an aircraft registered outside the Union, which is temporary admission and a separate regime.